The life philosophy series in this journal and in the collection of
Michael Szenberg (1992) suggest that a golden age of economics occurred
in the twenty-five years following World War II. The series indicates
that, with few exceptions, the great economists of that era were
motivated by social concerns. They deftly honed available analytical
tools to advance these concerns. In contrast, in the past twenty-five
years graduate study and research in economics seems to have been
propelled mostly by an interest in honing tools. This has been carried
out at the expense of interest in the subject matter. The tradeoff
should disturb all economists.

Like many of the economists of the golden age that preceded my
generation, my interest in economics was grounded in social awareness.
Growing up in industrial Western Pennsylvania where recession,
structural unemployment, distributive inequity and environmental abuse
were commonplace and coming of age in the social and political cauldron
of the 1960s, it troubles me to see my fellow economists separate the
analytical from the economic and the economic from the political and
social. This essay is grounded that concern. It suggests that, at its
root, the problem is an ethical one. The essay indicates that, like many
problems involving a deterioration of sensitivity, the solution lies in
the elevation of individual consciousness.

The essay begins by adducing some of the ethical questions that
surround the activities of economists in legal and political policy
advising spheres. It then posits that the technique worshiping research
methods and materialistic world view of modern economists may be
barriers to ethical awareness. It concludes with the suggestion that as
these perspectives are replaced with one of service, ethical awareness
can infuse the work of economists.

Ethical Concerns and the Activities of Economists As Expert Witnesses
and Political Advisors

In legal and political arenas economists are regularly called upon to
provide supportive evaluations and recommendations and to critique the
evaluations and recommendations that are produced by their peers. The
destructive power of unbridled advocacy and criticism in each of these
areas should not be lightly regarded.

The grounds for ethical inquiry into the behavior of economists as
expert witnesses and political advisors are substantial. As long as our
legal and political advocacy systems are structured to reward the
bearers of welcomed falsehood, economists will be confronted with
glowing incentives to use misleading data and statistics and to misapply their theories. At the same time other economists will have similarly
rich incentives to play the role of peer critics. There are ethical
pitfalls in both activities.

Economists who testify as expert witnesses in litigation frequently
use data whose foundations are, often necessarily, thin and statistics
which are replete with biases. On occasion, the application of the data
is not even consonant with modern economic theory. For example, in
calculating present values for litigation many expert economists
generate net discount rates exclusively by employing interest and
compensation rate data from historical time periods which bias the
results. This is often done on the premise that data from the past are
always the best predictors of the future, an assertion that overlooks
the availability of inexpensive ways of generating predictions from
contemporaneous information and, therefore, is inconsistent with modern
rational expectations reasoning.(1)

Ethical concerns also arise from the role of economists as advisors
to political groups. Economic advisors and their research networks in
academia devote much of their energy in this capacity to selling the
policies of their politician mentors. This type of advocacy is commonly
accomplished by generating optimistic forecasts of the economic outcomes
of these policies.

A pervasive but less widely perceived role for economic advisors and
their academic research networks is to legitimate the redistributive
programs of their mentors. This is regularly done by cloaking
politically profitable redistributions of after-tax income in
macroeconomic externalities. As examples, the Keynesian multiplier
concept was often invoked to help legitimate the redistributive policies
of the 1960's and the precepts of nineteenth century classical
economics were invoked under the rubric "supply side" to help
legitimate the status quo ante tax cut redistributions of the early
1980s, This political smokescreening would be somewhat more palatable if
these macroeconomic externalities were not taken so seriously by
ingenuous academics. For example, the supply side agenda dominated the
macro public finance research agenda for the better part of a decade and
the Keynesian multiplier perspective has biased macro principles
textbooks for several generations. These are only a few examples and
seasoned economists can likely come up with many more. Nevertheless, a
word of caution is in order. Even though the shortcomings of expert
economists and economic advisors are substantial, an ethical case can
also be made for urging care in attacking them. The ordinary business of
life is filled with temptations to criticize. This proclivity is
especially acute when one possesses expertise. The greater the level of
one's accomplishments in any given discipline, the greater the
propensity to judge one's peers. Whether gauged by educational
attainment, publications, honors, or their universal correlate, income,
worldly success promotes judgmental behavior. There is, however, a
fundamental difficulty here. Spiritual sources consistently enjoin against being judgmental. Compassion, they say, is more likely to elicit
a corrective response than finger shaking. Thus, metaphysical and
religious perspectives might provide a useful foundation for ethical
awareness not only amongst expert economists and economic advisors but
also amongst their critical peers. Unfortunately, the research methods
and world view of economists are often barriers to spiritually motivated
ethical awareness. The Research Methods of Economists as a Barrier to
Ethical Awareness

Economists should be aware of the pitfalls of professional hubris in
research activities. It will be argued here that the research methods of
economists lead them away from social and spiritual concerns.

Most economists are familiar with the phenomenon that I shall call
"research networks." Each network revolves about the research
paradigm developed by a handful of "masters." Young economists
receive employment and promotion benefits by associating with the
research program of a master. Such intimacy is largely achieved through
emulation. Success usually arises from a disciple's ability to
advance a master's research paradigm.

Increasingly economists rely on the manipulation of mathematical and
econometric techniques within a paradigm. The business of economic
research is nowadays rather thoroughly grounded in a research network
exclusivity that is driven by the mastery of technique. Research
paradigms typically evolve in the direction of more sophisticated
technique with little reexamination of their historical, institutional,
social science, and complementary economics premises. As a consequence
they tend to be evaluated by narrow, internally generated, criteria.
Because they are isolated from ongoing developments outside their
parochial domain and overspecialized in technique tinkering, modern
research paradigms tend to become endangered species, surviving in a
rarefied niche and, when exogenously shocked, periodically suffering
abrupt declines which exterminate entire generations of lemming-like
disciples. There are numerous contemporary examples of swift
paradigmatic decay. In macroeconomics alone in the past score of years
the array would include the demise of large scale structural
macroeconometric models and the decline of optimal control models of
macroeconomic policy. Disciples in each of these areas soared to heights
of formalistic virtuosity, even as their paradigm's link to its
broader sustaining environment was becoming more tenuous.

In each of these two areas the immediate environmental shock which
seemed to precipitate attenuation would appear to have been the rational
expectations "shift in microfoundations." However, from a
broader perspective, these "shifts" reflect the difficulty of
neoclassical mechanics in dealing with the fact that institutions (which
in neoclassical mechanics are either ignored or simplistically
parameterized) as well as firms and market participants undergo fairly
continual learning and adaptation. Large scale models had the
fundamental flaw of being unable to deal with a behavioral structure
that changed over time as agents learned more about the (policy)
environment. Optimal control models were similarly conditioned on the
assumption of an unchanging behavioral structure. The methodological
weakness shared by both examples was neoclassical mechanics'
premise of a fixed structure and an attendant narrowness of focus that
prevents specialists from taking a broader view of what the structure
is. Thus, the research outlook of macroeconomists causes them to be out
of touch with their subject matter.(2)

By this reasoning, today's offshoots of the overarching
neoclassical paradigm in macroeconomics, such as game theoretic models
of macro policymaking, will also tumble into extinction, even though
they have recently been dominating the pages of several major journals
and the macro research agenda of the NBER. For example, the
institutional premises of game theoretic macro policy models are
conspicuously flimsy. The essential actors in these models are a mythic
apolitical and monolithic policymaker and atomistic market participants
between whom election-centered, equilibrium-generating games are played
in inflation-unemployment space. There is little recognition of interest
group lobbying, policymaker misdirection, private sleuthing and the
resultant ongoing learning and adaptation that characterize our macro
policy institutions. Moreover, there is little sensitivity to the social
costs associated with these activities. These models will descend into
oblivion whenever their devotees finally become aware that they are
imposing a fixed structure which bears little resemblance to reality. At
that time the adherents will invariably cast about in their impoverished
neoclassical habitat for new "microfoundations." It may be
more fruitful for them to look elsewhere, and to consider developments
in history, the sister social sciences and, even complementary areas of
economics.(3)

Traditional emphasis on erudition in mathematics and econometrics is
causing an increasing premium to be placed upon imaginative involvement
in economic subject matter. As indicated the premium is the result of
simple substitution of technical proficiency for other types of
knowledge and the weakness of neoclassical mechanics at dealing
sensitively with the learning and adaptation in the evolution of real
world institutions. Economists are not vigorously responding to that
premium. As a result, genuine concern for the social problems of
inefficiency, waste, and injustice seems to have become increasingly
tangential to the research game. Research agendas fired by the broadness
of vision and social concerns of a Veblen, Keynes, Friedman, Buchanan or
Boulding are on the wane. To paraphrase Knut Wicksell, more attention is
being paid to the scalpel than the patient.(4)

At this point, we take the leap from methodology to metaphysics. From
a spiritual perspective, the paucity of heartfelt social concerns
amongst researchers is correlated to their egoism. Because there is
increasingly so little sensitivity to social concerns in economics
research, its antipode, egoism, would be expected to prevail. Ubiquitous
examples of market failure show that the pursuit of egoistic self
interest does not generate the best ethical outcome. Moreover, the great
spiritual traditions teach that egoistic behavior can never directly
serve higher purposes because with egoism comes the belief that worldly
achievement is the only source of power. Nowhere in the humanities and
social sciences is this belief more pronounced than in economics.
Unfortunately, transcendent religious and metaphysical motifs insist
that attachment to things outside one's self is antithetical to
true power, inner power.

The World View of Economists as a Barrier to Ethical Awareness

It has been argued that the research perspectives of economists lead
them away from social and therefore spiritual concerns. This, however,
is not the only barrier to their progress. The world view of economists
also obstructs ethical advance. Economists are often accused of viewing
the world in distinctly narrow and hard headed terms.(5) Outside the
physical sciences, the social sciences are more likely to deny the role
of the spiritual than the humanities and within the social sciences
economics is probably the least spiritual and the most materialistic and
atheistic (its antipode in the social sciences is perhaps
anthropology).(6)

A primary source of legitimacy for the free market is its ability to
confer wealth and power on those who master its workings. Thus,
economists deal with a world in which the perception of power as
external has shaped most institutions. Political and economic
hierarchies and individual and interest group competition in the economy
and the polity are premised on this perception. Those who embrace this
perception would normally tend to believe that an absence of external
power leads to insecurity and deprivation.

In contrast, the great spiritual perspectives teach, rather
paradoxically, that the perception of power as external brings only
fear, disappointment, pain and destruction. From their point of view,
genuine ethical behavior can emerge only when individuals abandon this
perception of power.(7) The spiritual masters teach that one must learn
to relinquish his or her worldly attachments. Ethical awareness may
allow individuals to avoid the pain and destruction that often precedes
such learning.

Religious and metaphysical thinking teaches reverence, not only for
one's fellow man but for all creatures and the planet itself.
Reverence is the experience of accepting that all life is of value. From
this disposition, power does not arise from fearfully dominating,
manipulating, and controlling life but from having reverence for it.
From this perspective, the businessperson's service to others is
made possible by profit and the politician's service to others is
made possible by electoral success rather than the other way around.(8)
The perspective of service could also advance the work of economists.
The step could be a difficult one because of the relative lack of social
concerns, attendant egoism, and materialistic world view (of power) that
may seem essential to the study of economics.

Ethical Precepts for Economists

A revolution in science and academia would take place if scholars
reflected on the question "How might I serve?" Consciousness
would change almost immediately and out of the ensuing agendas healing
could occur. For example, the great economic problems confronting
mankind often seem to emanate from man's destructive abuse of the
planet and his negative-sum competition with his fellow man. If
economists as experts and as policy advisors premised their activities
on service, they would become sensitive to these problems and the human
implications of subsequent policies would be spotlighted.(9) If research
economists premised their activities on service, they too would become
more sensitive and would surely be better able to develop innovations
for abating man's destructive activities, not only from increased
proficiency in the manipulation of technique but from, simple
caring.(10) From a perspective of service economists would have fewer
problems in justifying what they do and in motivating creativity in
their research networks.

Hard-headed realists may object that self interest is inconsistent
with service and decry the absence of incentive mechanisms to promote
service. What is the appropriate response to such realists? The
spiritual traditions invoked in this paper imply an ethics of individual
character.(11) According to these traditions the self interest that
prevails is that of the higher self, one that is consonant with service.
These traditions do not suggest that professional organizations should
intervene when accepted conventions are violated nor would they
prescribe incentive structures or canons for ethical decision making.
Rather, these perspectives indicate that if commitment to service were
embraced by economists, they would make responsible decisions, choices
that take into account their consequences and choices that follow from
high-mindedness. Economists would realize that not serving one's
highest self in legal testimony, policy advising, or research is not
aligned with an attitude of service. They would see that the sides in
legal, policy or research conflict are not really opposing, but aspects
of the same reality; this perspective advances compassion.(12)

What about those economists who remain "unenlightened," the
"irreverent?" Cynics are bound to contend that, while ethical
injunctions might cause professional discord to decline, the self
serving will thrive at the expense of the serving. What is the
appropriate ethical demeanor toward colleagues who would persist in
deceptive practices? How can one be properly critical in such
circumstances? The great spiritual sources do not require that one be
passive or disregard wrongdoing. They insist, however, that one look
with compassion upon the wrongdoers even as one challenges their
activities. This protects one from creating negativity and permits one
to see that the first place to eliminate wrongdoing is within oneself.

Concluding Comment

Recent research in monetary policy indicates that when it comes to
political ideology economists are extremely reliable (Havrilesky and
Gildea, 1991). In the area of ethics, however, modern economists are not
similarly stalwart. They seldom venture intellectually into that
ethereal realm.(13) As discussed in this paper, the neoclassical
technique worship, attendant egoism and materialistic world view of
economists militate against such forays. Nevertheless, as Alfred
Marshall long ago recognized, the activities of economists can never be
exempt from ethical inquiry.

Notes

1. For further details see Thomas Havrilesky (1989A).

2. The examples chosen here reflect the author's research focus,
monetary policy. This begs the question as to whether equally good
examples are found in other subdisciplines.

3. For more specialized criticism of the general mechanistic
neoclassical paradigm in microeconomics, see Mirowski (1987).

4. The life philosophies of many of the prominent economists who
matured professionally in the quarter century following World War II
were strongly propelled by social concerns. See Szenberg (1992).

5. Sen, (1987), pp 1-2. A likely reaction to this statement is
"What else could be expected from the utilitarian precepts of
economics?" However, with regard to English neoclassicists of the
nineteenth century this assertion is contestable. For instance the work
of Alfred Marshall is fraught with ethical considerations. See A. W.
Coats (1990).

6. Bloom, (1987), pp. 356-363.

7. "No one who has been hoaxed into the belief that he is
nothing but his ego. . ., can be chivalrous." Watts, (1966), p.
125.

8. Zukav, (1989).

9. The Catholic Bishops' Report on the U.S. economy suggests the
following three criteria for evaluating economic policy: (a) what does
it do for people? (b) what does it do to people? (c) how do people
participate?

10. Watts, op.cit. p. 102.

11. The work of MacIntyre is (1988) especially useful in this regard.
Among the life philosophies of great economists of this century, this
perspective is closest to that of Kenneth Boulding, Szenberg, op.cit.,
p. 9. 12. Hanh, (1976), p. 95.

13. The book by Sen, op.cit. applies ethics to welfare economics and
vice versa but does not consider ethical behavior by economists.

References

Bloom, Allan, The Closing of the American Mind, New York: Simon and
Schuster, (1987).